1088558 Ontario Inc. v. Musial, 2022 ONSC 5239

COURT FILE NO.: CV-15-620-00

DATE: 2022 09 16

SUPERIOR COURT OF JUSTICE - ONTARIO

BETWEEN: 1088558 Ontario Inc., Plaintiff

AND:

Marcin Musial and Ukrainian Credit Union Limited, Defendant

AND BETWEEN:

Marcin Musial, Plaintiff by Counterclaim

AND:

1088558 Ontario Inc. and Discovery Dream Homes Ltd., Defendants to Counterclaim

BEFORE: Doi J.

COUNSEL: John M. Gray, for 1088558 Ontario Inc., Plaintiff and Defendant to Counterclaim

Marek Z. Tufman, for Marcin Musial, Defendant and Plaintiff by Counterclaim

Catherine A. Bruder and Katrina Bekkers, for Discovery Dream Homes Ltd., Defendant to Counterclaim

HEARD: February 22, 23, 24, 25, 28, March 1, 2, 3 and 9, 2022.

REASONS FOR JUDGMENT

Overview

[1] This action arises from the construction of a log home which the plaintiff, 1088558 Ontario Inc. c/o business as Chandler Homes (“Chandler Homes”), built for Marcin Musial, the defendant homeowner. Mr. Musial’s home was designed by Discovery Dream Homes Ltd. (“DDH”) which also supplied a building materials package that Chandler Homes used to construct the home.

[2] Chandler Homes sued Mr. Musial for the $35,729.63 balance of its contracting fees that he refused to pay. Mr. Musial counterclaimed against DDH and Chandler Homes for $124,203.30 in breach of contract for alleged delays in supplying the building materials and building the log home, and for alleged construction deficiencies. The action as against Ukrainian Credit Union Limited was discontinued.

[3] For the reasons that follow, I find that the claim by Chandler Homes should be granted and the counterclaim by Mr. Musial should be dismissed.

The Parties

[4] The plaintiff, Chandler Homes, is a contracting business located in Little Britain, Ontario. Chandler Homes is owned and operated by Jeff Chandler who is an experienced contractor with over 35 years in the carpentry trade. His wife, Nancy Chandler, works at Chandler Homes as its administrator and bookkeeper. Since 1995, Chandler Homes has built custom homes, worked on renovations, and provided other contracting services. From about 1999 onwards, Chandler Homes has built between 40 and 50 log homes.

[5] The defendant by counterclaim, DDH, is an Ontario corporation located in Peterborough, Ontario. It operates a home design and manufacturing business. Among other things, it produces and supplies components for building log homes. DDH has been in business since 2002.

[6] The defendant, Marcin Musial, contracted with DDH to design a log home and to supply the materials for building the home. Mr. Musial then contracted with Chandler Homes to partially construct the log home (i.e., to its lock up stage, as detailed below) on property that he purchased on Mississauga Road in Caledon, Ontario.

Background

a. The Log Home Building Project

[7] Mr. Musial was born in Poland in 1984. He attended a forestry program in Poland before immigrating to Canada in 2004. By working extremely hard, Mr. Musial established himself in Canada. After working in demolitions, he found work as a concrete truck driver and learned how to pour concrete. With his brother, Mr. Musial now jointly owns and operates Drum Chipping Services Inc. (“Drum Chipping”) which is a successful business that removes dried concrete from inside the barrels of concrete transport vehicles by chipping away the excess buildup in the drums.

[8] In or around late 2011 or early 2012, Mr. Musial developed an interest in building a log home on property in the Peterborough area where he was working at the time. He attended DDH’s showroom in Peterborough and met Ben Hunter, a DDH salesman, who provided him with some information about building a log home. Mr. Musial had only limited construction knowledge and no prior home building experience. Mr. Hunter later took Mr. Musial to Lindsay, Ontario to view a log home that DDH had designed and supplied a building materials package for. The visit peaked Mr. Musial’s interest in acquiring a log home. At the time, Mr. Musial was about 27 years old. As set out below, most of his interactions and communications with DDH were through Mr. Hunter who regrettably passed away before trial.

[9] On April 12, 2012, Mr. Musial paid $338,000.00 to purchase land on Mississauga Road in Caledon, Ontario where he decided to build a log home. On May 16, 2012, he signed a design agreement with DDH and paid $5,000.00 to obtain preliminary sketches of a custom-designed log home with his design preferences and a quote for the supply of a building materials package (i.e., a kit of building components and supplies) to construct the home. Several days later, Ben Hunter introduced Mr. Musial to G.M., a building contractor, who arranged to visit the Caledon property on May 30, 2012 to meet and discuss the home building project. However, Mr. Musial decided to not immediately proceed with the project. Several months passed without any progress.

[10] On or about August 24, 2012, DDH gave Mr. Musial a draft contract (no. 24-08-12) to supply a materials package to build a 2,400 sq. ft. custom model log home for a total cost of $413,335.92, inclusive of HST. By email sent on September 5, 2012, Mr. Hunter confirmed that DDH was ready to manufacture the building components for Mr. Musial’s log home and was just waiting for him to line up financing. To help Mr. Musial obtain financing, Mr. Hunter gave him a referral to a loans officer at Scotiabank. He later referred Mr. Musial to another mortgage agent at Dominion Lending, and then to another loans officer at DLC Metro City Mortgages. However, Mr. Musial did not obtain financing and did not sign DDH’s draft supply contract which expired on September 30, 2012.

[11] By email sent on December 13, 2012, Mr. Musial asked Mr. Hunter to give a quote for a less expensive log home by expressly requesting a “CHEAP ONE.” In his December 14, 2012 response, Mr. Hunter indicted that DDH would revisit Mr. Musial’s package to see what could be done to adjust its costs, suggested a few ways to reduce the package price by $24,000.00, and indicated that they would meet to discuss the project. Over the next few months, Mr. Musial worked with DDH to arrive at a more affordable materials package to build his log home.

[12] Eventually, on April 12, 2013, Mr. Musial signed a contract (no. 12-04-13) for DDH to supply a less expensive materials package for a 2,400 sq. ft. “Weathered Woods” log home. After negotiating reductions of over $45,000.00, Mr. Musial and DDH agreed on the price for the supply contract which totalled $368,231.97 inclusive of HST. Upon signing the contract, Mr. Musial paid a deposit of $80,000.00 and was further credited the $5,000.00 that he paid on May 16, 2012 for the preliminary sketches of the log home, which gave him a total credit of $85,000.00. This left him owing a balance of $283,231.97 under the supply contract, that included: i) a $99,115.99 pre-production deposit that he was to pay before DDH would begin manufacturing the components for his log home materials package; and ii) a $184,115.99 deferred balance that he was to pay with an irrevocable assignment of mortgage proceeds that accompanied the supply contract.

[13] By the terms of draft irrevocable assignment of mortgage proceeds, DDH was to defer the remaining $184,115.99 balance until Scotiabank gave Mr. Musial a first advance of funds on a mortgage or line of credit on his Caledon property where the log home was to be built. However, Mr. Musial did not sign the draft assignment. For his part, Mr. Musial took the position that the draft assignment was never intended to form part of his April 12, 2013 supply contract with DDH because the draft assignment bore a different or incorrect contract number (“12-20-12”) instead of the actual or correct contract number (“12-04-13”) as set out in supply contract that he had signed. In addition, he noted that the draft assignment incorrectly gave the street number for his property on Mississauga Rd. in Caledon as being “ *** 05” instead of “ *** 01”, although the first page of the April 12, 2013 supply contract also gave the incorrect “*** 05” street number. Despite these discrepancies, however, the draft assignment clearly names Mr. Musial and accurately set out the $184,115.99 remaining balance that he owed DDH under the term of the supply contract. Taking this all into account, I am satisfied that the draft irrevocable assignment of mortgage proceeds was attached to or otherwise enclosed with the draft supply contract when DDH gave it to Mr. Musial in April 2013 for his consideration and signature.

[14] Given that Mr. Musial did not obtain a Scotiabank mortgage or line of credit on his Caledon property, as he conceded in his evidence, I am satisfied that he did not sign the draft assignment of mortgage proceeds by which the $184,115.99 balance was to have been paid to DDH from his first advance from the financing. Mr. Musial did not draw any employment income in 2013 from his concrete chipping business, as confirmed by his 2013 notice of assessment. As a result, his 2013 income was limited to just his investment returns which did not satisfy lending requirements for obtaining financing on the Caledon property, as he acknowledged at trial.

[15] By cheque dated August 1, 2013, Mr. Musial paid $99,115.00 to DDH as a pre-production deposit under the April 12, 2013 supply contract which he signed without executing the irrevocable assignment of mortgage proceeds. When Ben Hunter emailed Mr. Musial on August 19, 2013 to schedule production of his building materials package, Mr. Musial responded that he was unable to deal with the log home project then because he had just closed a deal to buy a 1-acre waterfront property on Irish Lake near Markdale, Ontario. Mr. Musial asked Mr. Hunter to wait for two or three weeks for his decision on scheduling production of the materials package for his log home.

[16] On September 25, 2013, Mr. Hunter emailed Mr. Musial to advise that DDH would require him to make full payment of the $184,115.99 balance on the supply contract before it would deliver the log home materials package to him. Mr. Hunter’s email to Mr. Musial stated as follows:

Shawn has informed me that we have scheduled production for your new home at the end of November. Delivery then will be ready for whenever you want to start construction. We also had a meeting including Ray King and we feel we will require full payment of outstanding balance prior to delivery of your log/timberframe home. There is nothing personal here just business as this is our standard business practice. We are hoping that we can work with you in the future with your other development when you are ready to proceed.

[17] By requiring full payment of the outstanding balance before delivering the building materials package, DDH invoked the last sentence to paragraph 3 of its terms and conditions for the supply contract dated April 12, 2013 which provided as follows:

The company is not obligated to deliver the material prior to payment of the contract price in full by the customer.

[18] By email sent on September 29, 2013, Mr. Musial responded by complaining to Mr. Hunter about DDH’s insistence on receiving full payment of the outstanding balance. To resolve his complaint, Mr. Musial spoke with Mr. Hunter and Ray King, the President of DDH, to negotiate a payment schedule for the outstanding $184,115.96 balance which led to the amended supply contract that Mr. Musial signed on December 18, 2013. Pursuant to the amended supply contract, the remaining $184,115.96 balance was divided into four (4) equal payments of $46,028.99 that each became due prior to the delivery of building materials as follows:

Deposit prior to delivery of floor framing and interior walls $46,028.99 Deposit prior to delivery of logs $46,028.99 Deposit prior to delivery of roof structure and shingles $46,028.99 Deposit prior to delivery of windows and doors $46,028.99

[19] As it was unclear to Mr. Musial when each of the four deliveries would occur, he signed the amended supply contract and returned it to DDH on December 18, 2013 with the following question handwritten on the first page of the contract just below the installment references: “I need to know when the delivery is scheduled? Step by step/plz.” It is unclear when or how DDH responded to Mr. Musial’s handwritten question. Regardless, it is apparent that Mr. Musial later sought clarification of the delivery schedule from Ben Hunter who explained the delivery schedule to Mr. Musial as events later unfolded, as set out below. In the circumstances, I am not persuaded that DDH was wholly unresponsive to Mr. Musial’s scheduling inquiries or unfairly prevented him from scheduling the delivery of his building materials for the construction project. I would add, parenthetically, that Mr. Musial handwrote the correct address of his Caledon property on the amended supply contract when he signed it.

[20] At trial, Mr. Musial claimed that he simply wanted to keep to the original payment terms under the initial April 12, 2013 supply contract and grew suspicious of the efforts by Ben Hunter and Mr. King which “forced” him into signing a new supply contract with different payment terms. However, Mr. Musial’s explanation overlooks the fact that he did not execute the draft irrevocable assignment of mortgage proceeds by which the $184,115.99 balance that he owed to DDH under the supply contract was to have been paid. As Mr. King testified, the matter of the outstanding balance was resolved by the 4-part payment schedule mentioned above that was negotiated after DDH relaxed its practice of requiring full payment before delivering building materials to make it easier for Mr. Musial to pay out the balance.

[21] Having regard to Mr. Musial’s exchange of emails from November 12 to 14, 2013 with Shawn Hunter (i.e., Ben Hunter’s son who also worked at DDH), I find that DDH agreed to add a wooden driveway entrance gate at cost to Mr. Musial’s building materials package in negotiating the amended supply contract. In making this finding, I do not accept Mr. Musial’s claim that DDH agreed to deliver the gate at no cost. Moreover, without corroborative evidence, I do not accept that DDH and Mr. Musial agreed to other “bonuses” to resolve the payment terms for the materials package, such as DDH designing a future home for Mr. Musial for a cost of just $1.70 per sq. ft., or Mr. King selling his property in Bobcaygeon, Ontario to Mr. Musial for “a good price,” as Mr. Musial has alleged and Mr. King has denied.

[22] While DDH was trying to resolve the payment terms with respect to Mr. Musial’s supply contract, Mr. Musial emailed Shawn Hunter on November 29, 2013 to ask for the log home’s subfloor to be delivered because he had just poured the foundation for the home. Later that day, Shawn Hunter replied that he could not deliver the materials package without a signed contract:

Martin this is the problem that I have been after you for months about. I cannot order your floor or start production until I have a signed contract. I have not even started the material take off to put the floor order together. Once I get the signed contract on Monday I will begin, until then I cannot give you a date for delivery on any of the package.

[23] On December 18, 2013, Mr. Musial signed the amended supply contract with DDH after agreeing to its terms that did not include a gate, a future home design price or any promises for the sale of property. To advance the building project, Ben Hunter made efforts to help Mr. Musial select a contractor to build his log home.

[24] In the course of working with Mr. Musial, Ben Hunter provided him with the names of several contractors known to DDH who could build the log home. Mr. Musial did not know any contractors and relied on Mr. Hunter to suggest contactors for his log home project. One contractor that Mr. Hunter recommended, R.P., operated a small contracting firm that declined Mr. Musial’s project as it was too large for its modest 2-person building crew. Another contractor, G.M., that Mr. Hunter referred to Mr. Musial, was not registered with Tarion as required by s. 10.2 of the Ontario New Home Warranties Plan Act, RSO 1990 c O.31, which raised concerns with the loans officer at Scotiabank that Mr. Musial had approached on Mr. Hunter’s advice to seek financing on his Caledon property. After considering the other building contractors that Mr. Hunter had mentioned, Mr. Musial chose to have Chandler Homes build his log home as it was registered with Tarion and had more crew members who were available to work on the project.

[25] In its first estimate dated November 16, 2012, Chandler Homes gave Mr. Musial an initial quote of $673,722.00 plus HST to fully build his log home, exclusive of travel or meal costs, as set out in the following:

Item	Cost
Excavation (Imported Material)	$30,000.00
Septic	$20,000.00
Foundation & Concrete Floors	$52,000.00
Shingle Roof	$16,000.00
Main Floor & Garage 3954 sq. ft.	$110,712.00
Basement Framing	$6,000.00
Covered Porches & Decks 451 sq. ft.	$8,118.00
Equipment Rental (Crane)	$5,000.00
Plumbing (NOT including ensuite shower)	$30,000.00
Electrical (No pot lights, 200A Service, no incoming)	$22,000.00
Heating (forced air gas HRV)	$32,000.00
Flooring ($10/sq ft @4157, main floors only)	$41,570.00
Drywall	$19,500.00
Kitchen – upstairs vanity & kitchen, laundry (no tops)	$30,000.00
Kitchen – basement kitchen	$15,000.00
Trim Package	$24,000.00
Stairs & Railings (4 sets @4500)	$18,000.00
Stain & Paint – Interior	$9,610.00
Stain & Paint – Exterior	$15,965.00
Insulation (spray foam)	$30,000.00
Ensuite Shower	$5,000.00
Stone Veneer	$45,000.00
Fire Place	$20,000.00
Garage Doors Insulated	$7,000.00
subtotal	$612,475.00
GENERAL CONTRACTOR FEE (10%) Travel and Meal ALL to be discussed	$61,247.00
TOTAL	$673,722.00 plus HST

[26] Importantly, Chandler Homes’ initial quote included a $61,247.00 general contractor fee (i.e., being 10% of the $612,475.00 estimated project subtotal). Mr. Musial did not accept the quote. After several months passed, Mr. Chandler came to believe that Mr. Musial had decided to select a different contractor.

[27] On May 10, 2013, Mr. Musial advised his Scotiabank loans officer that he had met with Mr. Chandler to request a new quote by Chandler Homes for the building project. On or by May 13, 2013, Chandler Homes gave its new quote to Scotiabank at Mr. Musial’s request in order for the bank to consider it along with his application to obtain financing.

[28] Subsequently, Mr. Hunter contacted Mr. Chandler on Mr. Musial’s behalf for a further requote and to inquire about Chandler Homes’ availability to work on the project. After learning that Mr. Musial still wanted to build the log home and was trying to secure funding, Mr. Chandler gave a revised quote dated December 4, 2013 for Chandler Homes to build the home to just its lock up or close-in stage (i.e., by building only the framing, exterior walls, roof, decking, windows and doors so the home was enclosed and could be locked up) as Mr. Musial wanted to complete the rest of the building project by himself. Notably, Chandler Homes’ revised quote did not include any general contractor work because Mr. Musial wanted to act as his own general contractor to save money, as further discussed below. In turn, Chandler Homes gave Mr. Musial a much lower estimate of only $134,830.00 plus HST to lock up or close in his log home (i.e., reflecting a figure approaching just one-fifth of its initial $673,722.00 quote in 2012 to fully construct the home). The revised quote by Chandler Homes gave the following estimate:

Item	Cost
Labour to Close In Main Floor and Garage	$110,712.00
Basement Framing	$8,000.00
Covered Porches and Decks (No Railings)	$8,118.00
Crane Rental	$8,000.00
Subtotal	$134,830.00
HST	$17,527.90
Total	$152,357.90

Note: No Shingling Or Steel Install Labour

[29] By email on December 5, 2013, Mr. Musial agreed to Chandler Homes’ revised quote.

[30] Mr. Chandler understood that Mr. Musial had decided to act as his own general contractor to save money on the project. Having previously worked as a general contractor, included on roughly twenty log home construction projects, Mr. Chandler testified that a general contractor’s duties include coordinating the building project by, among other things, scheduling the delivery of building materials and ensuring that they are ready on site for contractors to install for the project. Mr. Chandler also explained that a general contractor has the overall responsibility to ensure that everyone on the project is properly doing their job.

[31] Mr. Musial denied that he decided to act as his own general contractor for the log home construction project and claimed to not know or understand a general contractor’s role for such an undertaking. However, during his examination for discovery on March 29, 2016, Mr. Musial clearly and repeatedly stated that he chose to act as his own general contractor on the project to save money. As he explained at his discovery, he decided to not hire a general contractor as doing so would be too expensive, particularly as he felt that he had enough experience to drive the project himself. When asked at his discovery to describe a general contractor’s role, Mr. Musial candidly answered that a general contractor’s duties and responsibilities included organizing everything for the project to ensure that contractors had work to do and got paid. He further explained that his role as the general contractor included arranging for contractors to access to the job site, arranging for the foundation of the home to be built, and ensuring that the site was ready for contractors, including Chandler Homes, to do their work. In light of this, I am quite satisfied that Mr. Musial clearly decided to act as his own general contractor for the project to build his log home and adequately understood the role of the general contractor which included coordinating deliveries and work activities at the job site so that contractors and tradespeople could perform their work and properly complete their assigned tasks. That said, I accept that Mr. Musial was obviously an inexperienced general contractor who repeatedly quizzed Mr. Chandler on how to direct the other tradespeople to complete their jobs while he worked out his duties as a general contractor. As set out below, Mr. Musial’s lack of familiarity with his role and duties as the general contractor would create a number of problems for the project.

[32] By email on January 9, 2014, Nancy Chandler sent Mr. Musial a formal contract from Chandler Homes to confirm its work on the project (i.e., to lock up or close in the log home) for $134,830.00 as previously set out in the December 4, 2013 estimate, along with $13,483.00 invoice for a 10% pre-build deposit on the project. Chandler Homes’ formal contract provided as follows:

To perform work as discussed per plans provided by Discovery Dream Home on Purchaser’s lot located in Caledon for estimated cost of $134,830.00 plus HST.

This price includes:

• Labour to close in Main Floor and Garage and Frame Basement
• Labour to frame covered porches and decks (NO Railings)
• Estimated Crane Rental of $8,000.00
• Toilet facilities to be provided at initiation of project at purchaser’s expense.
• Any labour supplied in addition to contract will be invoiced at a rate of $45.00/hour/man
• Any expenses incurred by Chandler Homes on behalf of the owner/purchaser will be invoiced at Cost + 10%. (Including materials, subtrades and any incidental expenses)
• All work to be completed in a timely and professional manner in [accordance with] all building codes and by-laws.

PAYMENT SCHEDULE Payment due within five business days of invoice.

• Deposit (10%)
• Start Up (25%)
• Exterior Walls and Roof Sheeted (50%)
• Covered Porches framed (10%)
• Completion of project (5%)

[33] Mr. Musial claims that in or around the end of June 2014, Chandler Homes agreed that he would perform the basement framing himself to further reduce the total amount owing under the contract. However, Mr. Chandler testified that he did not agree to let Mr. Musial, who was clearly an inexperienced builder, perform the basement framing work due to the key structural issues associated with the basement framing work and its support of the first subfloor to the log home. On balance, I find on Mr. Chandler’s evidence that the basement framing work was never removed from the building contract between Mr. Musial and Chandler Homes due to the associated structural issues that would have made it impracticable for Mr. Musial to perform this work.

[34] On the evening of January 9, 2014, Mr. Musial indicated that he would pay for half of the project (i.e., $67,415.00) in cash, thereby signalling his wish to negotiate a discount on the overall contract price. Shortly thereafter, at Mr. Musial’s request, Chandler Homes removed the $8,000.00 crane rental item from the building contract because he felt that he could rent his own crane at a cheaper price. Following these adjustments, Chandler Homes’ building contract with Mr. Musial came to $126,830.00 (i.e., $134,830.00 less $8,000.00) plus HST. Although Mr. Musial promised to give Chandler Homes a signed copy of the building contract, he never ended up providing one. As a result, Chandler Homes never had a signed copy of its building contract with Mr. Musial. Nevertheless, from their subsequent exchanges of correspondence and conduct, I am satisfied that Mr. Musial agreed to have Chandler Homes frame or close in the log home under the terms of their building contract as described above.

[35] Although its contract with Mr. Musial did not initially require Chandler Homes to supply any building materials, Chandler Homes ended up having to supply deck joists, decking on top of the deck joists, and some posts and beams due to design changes that Mr. Musial introduced during the course of the building project. Under the terms of their building contract, Chandler Homes agreed to procure building supplies for Mr. Musial at cost plus a 10% administrative charge.

[36] A dispute arose over travel and accommodation expenses. Chandler Homes is a business located in Little Britain which is near Lindsay, Ontario. Most of its workers live in Lindsay or its surrounding area. The drive between Lindsay and the Caledon job site takes about 1 hour and 45 minutes to 2 hours each way. Given the distance, Mr. Chandler testified that Mr. Musial agreed to pay for fuel costs and worker accommodation costs. In turn, Chandler Homes agreed to cover the costs of providing its workers with meal allowances during the project.

[37] Around January 16, 2014, Mr. Musial met Ms. Chandler in Little Britain for the purpose of signing his contract with Chandler Homes and delivering a deposit cheque. During the meeting, Ms. Chandler explained to Mr. Musial the scope of the framing or closing in work that Chandler Homes would perform to complete the construction project to its “lock up” stage under the terms of the building contract. At Mr. Musial’s request, she removed the crane rental from the building contract (i.e., as Mr. Musial agreed to rent the crane by himself). In addition, she discussed having Chandler Homes start work by installing the subfloor to the log home on January 27, 2014 provided that DDH could confirm delivery of the subfloor materials to the job site by that date. Mr. Musial also raised the issue of travel and accommodation costs, offered to “lend” his 407 transponder to defray travel costs, and mentioned a house that he could rent to billet Chandler Homes’ workers over the course of the project. By the end of the meeting, Mr. Musial declined to sign the building contract because he first wanted to make some inquiries with Jeff Chandler. Among other things, Mr. Musial wanted a 7% discount from the base price of the contract (i.e., and to not pay any HST) in exchange for paying in cash which Ms. Chandler would not accept. During the meeting on January 16, 2014, Ms. Chandler had tried to call Mr. Chandler about her discussions with Mr. Musial but could not reach Mr. Chandler by phone. When Ms. Chandler told Mr. Musial that she would not agree to his terms without Mr. Chandler’s approval, Mr. Musial advised that he intended to discuss his terms with Mr. Chandler and left her home. Later on, arrangements were made for Mr. Musial to sign his contract with Chandler Homes and give a copy to Mr. Chandler when he attended the Caledon site, but Mr. Musial never provided Mr. Chandler with a signed copy.

[38] On January 23, 2014, Mr. Musial emailed Ms. Chandler to negotiate a 7% discount to the building contract for travel time and a removal of the accommodation costs. Ms. Chandler would not agree to Mr. Musial’s proposed discount and conveyed her understanding from Mr. Chandler that Mr. Musial had agreed to pay for the accommodations (i.e., with Chandler Homes covering meal allowances for its workers).

[39] At trial, Mr. Chandler testified that he never agreed to give Mr. Musial a 7% discount from the base price of his contract or waive HST payments if Chandler Homes was paid in cash.

[40] On January 24, 2014, Mr. Musial emailed Ms. Chandler in an effort to (re)negotiate the accommodation and travel costs, stating:

He said that 50% he will pay for motel and I will do pay 50%. If you expect from your guys to work over 8 hrs on that kind of weather then go ahead with motel!! I can cover 50% of your cost. However, I still thinking that is [wasting] money to do it now in winter. Different situation will be in March, day will be longer, [weather warmer] and then your guys can work [longer]! Your decision.. If the 407 etr hiway is the problem I can give my transponder.

[41] Later that evening, Ms. Chandler responded to Mr. Musial with the following:

It’s not our policy to pay 50% and I spoke with Jeff and he does not recall this conversation. He was under the understanding that you had a house that you could rent. Jeff says he will try driving next week and see how it goes. He will do subfloor next week and gladly wait until march [sic] to do the logs.

[42] Over the next few days, Mr. Musial and Ms. Chandler exchanged further email messages about accommodation expenses for the project. During these exchanges, Ms. Chandler explained to Mr. Musial that Chandler Homes’ policy was for customers to pay travel and accommodation costs for projects that were located beyond reasonable commuting distances from Little Britain. Given that Mr. Musial ultimately paid the various fuel and accommodation costs that Chandler Homes invoiced him (i.e., together with a 10% premium for administrative costs as set out under its building contract with him), I am satisfied that Mr. Musial agreed to pay for these expenses.

[43] When Mr. Musial initially discussed the log home project with Mr. Chandler in 2013, both anticipated that construction would start in or around September 2013 when Chandler Homes had a number of its workers available to work on the project. However, as events unfolded, it became apparent that Mr. Musial was not ready for Chandler Homes to start its work on the project until late January 2014 at the earliest due to certain financing and contract-related issues that were outstanding. Among other things, Mr. Musial did not sign DDH’s amended supply contract until December 18, 2013, and did not arrange for DDH to deliver materials until Ben Hunter confirmed on January 16, 2014 that the subfloor components would be delivered on January 27, 2014 after Mr. Musial promised to pay his first $46,028.00 installment to DDH by then. Moreover, until the January 16, 2014 meeting with Mr. Chandler, Mr. Musial had not arranged for Chandler Homes to start working on the project as of January 27, 2014. Even after these arrangements were made, Mr. Musial persisted in trying to negotiate more favourable terms for the building contract with Chandler Homes until at least January 24, 2014.

b. Construction of the Log Home

[44] On January 27, 2014, Mr. Chandler and a work crew from Chandler Homes attended the job site in Caledon to begin work on the log home project. On or before that date, DDH delivered the subfloor components for the log home which were ready at the job site for installation. Prior to that date, Mr. Musial had completed the excavation work on the site with his father, had installed footings for the log home, and had arranged for its foundation to be built.

[45] Between January 27, 2014 and February 7, 2014, Chandler Homes installed the subfloor to the log home. According to Mr. Chandler, the subfloor was installed without difficulty. After installing the subfloor, Chandler Homes’ next task was to mount and install the logs for the home. However, the logs were not available for Chandler Homes to install as Mr. Musial had not arranged to have the logs delivered by then. Although Chandler Homes was otherwise ready and available on February 7, 2014 to install the logs, the lack of available logs meant that they could not proceed with this work. As a result, Chandler Homes left the site to work on other projects until Mr. Musial had arranged for the logs and other required building materials to be delivered.

[46] In this action, a key issue in dispute is who was responsible for the building delay caused by not having the logs and other components ready to be installed once the subfloor was built. Chandler Homes submits that Mr. Musial caused the building delay by not making reasonable arrangements to have the building materials and components delivered and ready for installation when required. For his part, Mr. Musial submits that DDH and Chandler Homes were responsible for communicating with each other to coordinate the production and delivery of building materials around the contractor’s availability to work on the project. As evidence of this, Mr. Musial notes an email that Ms. Chandler sent to him at 3:15 pm on January 16, 2014 (i.e., after their meeting earlier that day) in which she wrote, among other things, “[o]nce I hear back from Discovery [Dream Homes] I will confirm start date of Subfloor as discussed (Mon, Jan 27^th [2014]) so that accommodations etc. can be confirmed.” Given that Ms. Chandler was to confirm when Chandler Homes’ work on the subfloor would start once DDH advised when the subfloor components would be delivered to the job site, Mr. Musial claims that he understood that Ms. Chandler would continue to coordinate DDH’s deliveries with Chandler Homes’ work over the course of the entire project.

[47] To properly understand Mr. Chandler’s email, it is important to consider the context in which it was written. Her email to Mr. Musial on January 16, 2014 captured the outcome of their earlier meeting that day when they confirmed the scope of Mr. Musial’s building contract with Chandler Homes dated December 4, 2013 (n.b., that excluded a crane rental after Mr. Musial agreed to rent the equipment by himself) and clarified the payment schedule under the contract. To clarify the payment schedule, Ms. Chandler wrote in her email that Chandler Homes would invoice the third draw (i.e., described as “Exterior Walls and Roof Sheeted”) under the December 4, 2013 contract to Mr. Musial (i.e., for 50% of the total contract amount) upon the completion of the walls being framed and the roof being sheeted. Similarly, the contract provided for a second “Start Up” draw (i.e., for 25% of the total contract amount, roughly approaching $35,829.48 inclusive of HST) that Chandler Homes was to invoice him when it started its work on the project. Given the sizeable amount of this impending invoice, I am satisfied that Ms. Chandler’s email of January 16, 2014 was meant to flag the issue of Chandler Homes’ start date for the project so that Mr. Musial would know when to expect its corresponding invoice. As construction could only start after building materials were delivered to the job site, I accept that Ms. Chandler tentatively set Chandler Homes’ start date as January 27, 2014 conditional on DDH confirming its delivery of the subfloor components by then, which was a fair and reasonable approach in the circumstances. In turn, and absent any indication by anyone at DDH or Chandler Homes that either entity would coordinate the delivery of building materials with building activities for the project, I am not persuaded that the responsibility of scheduling the delivery of materials and coordinating construction activities for the building log home somehow shifted away from Mr. Musial who, having chosen to act as his own general contractor for the building project, was responsible for these scheduling issues as he clearly recognized during his examination for discovery.

[48] As Mr. Musial conceded in his discovery evidence, a general contractor coordinates and supervises a building project by, among other things, obtaining the required building materials and supplies, hiring contractors or tradespersons (such as carpenters, plumbers and electricians), and generally managing the project and the work being performed. Mr. Chandler similarly described a general contractor’s duties and responsibilities in comparable terms. Accordingly, I am satisfied that Mr. Musial was quite aware of his responsibility as the general contractor to ensure, among other things, that adequate arrangements were made for the necessary building materials to be delivered so that contractors and tradespersons could perform their work on the project. The fact that Mr. Musial had to pay DDH the outstanding instalments under the payment schedule to their amended supply contract before DDH would deliver the next tranche of building materials further underscored the need for him to appropriately arrange to have building materials delivered.

[49] In any event, the record shows that Mr. Musial stayed in fairly close communication with Ben Hunter at DDH to schedule and coordinate the delivery of building materials to the job site. Shortly after Ms. Chandler sent her email to Mr. Musial at 3:15 pm on January 16, 2014, as set out earlier, Mr. Musial emailed Ben Hunter at DDH at 4:46 pm that same afternoon to confirm his understanding that DDH would be delivering the subfloor components for January 27, 2014. In doing so, I find that Mr. Musial played an active role from the outset of the project in arranging for DDH to deliver the necessary building materials as required to fulfill his responsibility as the general contractor to have the materials ready for installation as the project unfolded.

[50] Importantly, in his same January 16, 2014 email message, Mr. Musial asked Ben Hunter when DDH would deliver the logs for the project. About half an hour later, Mr. Hunter emailed back to say, “[i]t looks like Jeff [Chandler] has scheduled the logs on Monday 24^th of February.” Within the hour, Mr. Musial replied that he would send over a certified $40,000.00 cheque a few days before January 27, 2014 to pay the first $46,028.99 instalment under the December 18, 2013 supply contract (i.e., due prior to delivery of floor framing and interior walls). In the same email message, Mr. Musial further stated his apparent position that his next $46,028.99 instalment under the supply contract was due by February 25, 2014 but the contract stipulated that this instalment was due prior to the delivery of logs (i.e., before February 24, 2014) and proposed that DDH give him a discount in exchange for paying the instalment in cash. For his part, Mr. Chandler denied that he involved himself in scheduling DDH’s delivery of logs or any other building materials for the project, and stated that Chandler Homes only delivered additional materials (i.e., not included in DDH’s building materials package for the log home project) at Mr. Musial’s request under the terms of its building contract. In any event, I am satisfied that Mr. Musial agreed, at least initially, to the February 24, 2014 delivery date that Mr. Hunter gave him, and did not otherwise seek to change or vary this delivery date in their communications on January 16, 2014. Subsequently, DDH advised Chandler Homes by email on March 11, 2016 (i.e., after this action was brought on February 6, 2015) that DDH actually had delivered the logs for Mr. Musial’s building materials package on March 7, 2014. Absent any evidence to suggest otherwise, I accept that Mr. Musial moved up the delivery date for the logs to March 7, 2014 after paying DDH for the materials.

[51] After finishing the subfloor installation around February 7, 2014, Mr. Chandler advised Mr. Musial to heat the basement to prevent frost damage to the wooden floor, supporting walls, post and beams. However, Mr. Musial did not follow Mr. Chandler’s advice after deciding that the cost to heat the home during the winter season would be prohibitively expensive for him. Predictably, snow and ice accumulated in the unheated basement due in part to snowfall but largely on account of the migration of groundwater from a neighbouring farmer’s field that unfortunately persisted over much of the building project due to problems related to grading issues.

[52] On March 4, 2014, Mr. Musial emailed Ben Hunter to press DDH to deliver the logs for the building project. His email also noted that the foundation for the log home had, “a few nasty cracks which arose as a result of frost in January,” and suggested that DDH was responsible for these damages by stating, “[i]f DDH were on time with delivery I would heat up the basement with portable heaters and prevent the damage,” even though he did not take Mr. Chandler’s earlier advice to heat the basement. In his email, Mr. Musial also asked Mr. Hunter not to order any doors or windows as he apparently wanted to negotiate a discount with DDH to offset these damage or losses before paying DDH its next installment. Shortly thereafter, Mr. Musial emailed Nancy Chandler to schedule Chandler Homes’ return to the job site to install the logs after DDH advised that the logs were ready for delivery. Ms. Chandler indicated that Chandler Homes could resume its work at the job site on March 17, 2014.

[53] On March 7, 2014, DDH delivered the logs. However, Chandler Homes did not return to the project on March 17, 2014 due to its other work commitments. On March 17, 2014, Ben Hunter made inquiries and later advised Mr. Musial that Chandler Homes would resume work on March 24, 2014. He further advised Mr. Musial that custom windows generally take 5-6 weeks to produce and ship, and asked Mr. Musial to place his order for windows and doors to ensure that they would be available when Chandler Homes was ready to install them. In response, Mr. Musial deferred his window and door order for at least 2 or 3 weeks (i.e., while promising to not raise any problems about late deliveries) saying that he was unaware of the window size required for the basement. Mr. Musial also asked when he would next have to pay DDH for the framing materials, stating that this was “most important for today.” Having regard to this exchange, I find that Mr. Musial understood that it could take quite a while to order windows for his log home. In addition, I accept that Mr. Musial was on a fairly tight budget and required sufficient intervals between his instalment payments to DDH to ensure that he had sufficient funds to meet his prevailing financial obligations.

[54] On March 24, 2014, Chandler Homes did not resume work at the Caledon site as it was trying to complete another project. After calling Mr. Chandler that morning, Ben Hunter arranged for Chandler Homes to return to the Caledon project on April 7, 2014. Thereafter, Chandler Homes moved up its return to the Caledon site to March 31, 2014.

[55] On March 31, 2014, Chandler Homes returned to the Caledon job site to begin installing the logs. Regrettably, ice had formed in the basement due to snowfall and groundwater migration and had created as much as 2 ½ feet of ice build-up in certain spots as Mr. Chandler described in his evidence. At trial, Mr. Musial tried to suggest that the build up of ice on the subfloor was only one or two inches at most with about a foot of ice accumulation between the footings to the home. However, when asked about the ice build-up in the basement during his examination for discovery, Mr. Musial stated that, “it’s possible that [the build up] was two feet of ice.” As a result of the build up of ice and frost-related damage, portions of the subfloor had become uneven. In order to install the logs, Mr. Chandler advised Mr. Musial to heat the basement to remove the ice so that the subfloor would be level for positioning the logs correctly. Mr. Musial replied that heating the basement would be too expensive. Preferring to take a more cost-effective approach, Mr. Musial told Mr. Chandler that he would wait for the ice to melt naturally (i.e., as the weather warmed) instead of heating the basement. At trial, Mr. Musial initially testified that he did not remember whether Mr. Chandler told him to heat the basement to avoid or remove the ice. Mr. Musial later testified that he had tried to heat the basement without success which led him to abandon the effort. Given his apparent impatience for Chandler Homes to finish its work on the project, it seems improbable that Mr. Musial would not remember whether Mr. Chandler told him to heat the basement. On balance, I find that Mr. Musial decided to not follow Mr. Chandler’s advice to heat the basement and instead chose to wait for the ice to melt away naturally in order to save money. By taking this approach, I find that Mr. Musial delayed the building project.

[56] Around May 19, 2014, Chandler Homes returned to the job site after the ice in the basement had melted. Unfortunately, the earlier build-up of ice had damaged the basement subfloor which Chandler Homes had built in late January and early February 2014. Specifically, ice had separated the wood members of the subfloor which had warped and become uneven due to frost-related distortion. Mr. Musial minimized the nature and extent of the damage to the subfloor. However, I accept from the evidence of Mr. Chandler and his foreman, Ryley Bowry, that Chandler Homes had to repair and level the subfloor to properly install the logs which required the subfloor to be de-nailed, reassembled, and leveled by shimming the warped floor joists to create a level surface for the logs to be correctly positioned during installation. The necessary subfloor repairs created additional work for Chandler Homes and delayed the project.

[57] The building project was further delayed for other reasons. Among other things, Chandler Homes ended up having to cut pockets into the concrete foundation that Mr. Musial had built without properly understanding that the plans required the pocket features in the foundation. As Mr. Musial was busy operating Drum Chipping Services Inc. and unavailable to fix this oversight by cutting the pockets himself, Chandler Homes was held up from installing the beams that were needed to build the framing for the subfloor installation. Accordingly, to advance its work on the project, Chandler Homes was forced to retrofit the pockets by chipping and grinding them into the concrete foundation using hand tools. This was difficult and time-consuming work. In addition, certain piers that had not been completed had to be installed and incomplete excavation work for the garage needed to be finished. During the project, Chandler Homes was forced to move or relocate delivered building materials around the congested job site to accommodate the delivery of top soil and fill for the project, all of which delayed actual building activities. As Mr. Musial placed a winter log delivery over frozen top soil, the logs ended up shifting and became stuck after the soil thawed in the Spring which forced Chandler Homes to retrieve the logs using machines. Backfilling work on the home and garage was either incomplete or inadequate and resulted in lower grades that did not meet plan specifications. Further, as the lower grades did not properly align with the structural foundations, Chandler Homes workers were forced to stand on ladders instead of the ground while building the home which made it more difficult and time consuming for them to complete their work on the project. At one point, Chandler Homes had to tear down and reset a scaffold after Mr. Musial arranged for a hydro trench to be dug in the same location where the scaffolding had been in use to construct the home. Later on, after deck materials were not delivered to the job site, Mr. Musial asked Chandler Homes to source and deliver the materials it required to continue its construction work as he lacked the time or ability needed to procure these materials. However, Mr. Musial would not otherwise allow Chandler Homes to purchase any required materials on its own without his approval as he insisted on controlling the purchase of building materials to manage costs. As a result, if Chandler Homes was short a piece of wood, it generally had to wait for Mr. Musial to either procure the item or arrange for it to be delivered. Over time, the lack of ready building components and supplies progressively slowed the pace of work as Chandler Homes waited for required materials to arrive. On top of this, Mr. Musial would constantly ask Mr. Chandler about what to do next as he did not understand his responsibilities for the project or how to properly fulfill them. To this end, Mr. Musial repeatedly asked Mr. Chandler to direct other tradespersons as he could not instruct them himself due to his lack of knowledge with building a log home despite purportedly acting as his own general contractor for the project. As a result, Mr. Chandler was frequently diverted from the actual work that Chandler Homes had to perform under its building contract. Collectively, I am satisfied that all of these factors created additional work for Chandler Homes and delayed its work on the project to varying degrees.

[58] On or about May 30, 2014 DDH delivered lumber and plywood sheathing for Mr. Musial’s building materials kit. On or about June 10, 2014, DDH delivered the trusses for the project.

[59] On June 12, 2014, Mr. Musial emailed Ray King, the President of DDH, to complain that Chandler Homes was behind schedule in finishing its work on the log home project. Mr. Musial’s email also blamed DDH for construction delays and mentioned an earlier meeting when he claims that he agreed not to seek compensation from DDH for its alleged delays in producing the logs for his building package if Chandler Homes completed the framing of his log home by June 30, 2014. Mr. Musial claims that Mr. Chandler verbally committed on a prior phone call to have Chandler Homes finish its work by then, but Mr. Chandler flatly denies doing so. In his June 12, 2014 email, Mr. Musial noted an impending June 30, 2014 deadline for him to obtain financing from a bank and indicated his intention to consult a lawyer about bringing a claim for damages if the framing work was not completed by then.

[60] On June 18, 2014, Mr. Musial met with Mr. King and Mr. Chandler at DDH’s offices in Peterborough to discuss the project. Among other things, the issue of the frost-related damage to the subfloor was raised. Although Mr. King did not believe that DDH was responsible for the frost-related damage, he agreed to have DDH pay one-half of the cost to repair the subfloor as a courtesy to Mr. Musial and to restore DDH’s business relationship with him. The parties agree that DDH paid this $2,485.41 repair cost as Mr. King promised.

[61] As construction progressed, Chandler Homes erected the log walls, built the main floor of the home, built the upper floor, and constructed the roof before completing the garage. Chandler Homes later worked on the decks for the home and eventually installed its doors and windows after they were delivered to the job site.

[62] Over the course of the project, Mr. Musial decided to change his log home plan to create a new basement entrance. This required Chandler Homes to raise the deck around the entranceway to allow for sufficient headroom. To accommodate this change, Chandler Homes had to purchase beams and modify the surrounding decking area. These modifications caused Chandler Homes to undertake additional work which delayed construction of the home.

[63] Mr. Musial claims that he grew weary and frustrated with alleged construction delays by Chandler Homes that led him to retain a law firm and make a formal demand on June 24, 2014 that Mr. Chandler to sign a declaration for Chandler Homes to complete its work on the project by July 25, 2014. For his part, Mr. Chandler claims that he was asked to sign the declaration because Mr. Musial was applying for financing to buy land and build homes and that his lender wanted an assurance of the project completion date before valuing the Caledon property as security for the loan. On its face, an email sent on June 26, 2014 by Malicki & Malicki (i.e., the law firm that Mr. Musial had retained) to Chandler Homes with a revised draft declaration bearing a July 31, 2014 completion date at least partly supports Mr. Chandler’s account by indicating that Mr. Musial wanted the declaration to be signed to support a financing application for a land development venture (n.b., an earlier June 24, 2014 demand by Malicki & Malicki states that Mr. Musial wanted to give the signed declaration to his bank as an assurance for a line of credit to hire contractors to complete necessary work on the log home). Mr. Chandler did not agree to sign the declaration until his lawyer had reviewed its terms. However, Mr. Musial is said to have been persistent and repeatedly asked Mr. Chandler to sign the declaration while insisting that he would only use it to support his application for a loan and not act on it against Chandler Homes. Given Mr. Musial’s tenacity and his repeated assurances regarding the limited purpose of the declaration, Mr. Chandler relented late at night on July 1, 2014 and, against his better judgment, signed the declaration believing that Mr. Musial would stop hounding him once the declaration was given to his lender. At the time that he signed the declaration, Mr. Chandler understood that it was impossible for Chandler Homes to actually finish its work by July 31, 2014 as many building components had not been delivered and could not be installed by this deadline. As it turned out, it was not until September 5, 2014 that DH delivered siding, deco timbers, stain and locks for the project which all arrived after Chandler Homes had procured other building materials and supplies (i.e., pine beams, deck joists, and other lumber to complete its decking work) from August 22 to 26, 2014 on Mr. Musial’s instructions. Chandler Homes later bought more building supplies for the project on September 9 and 10, 2014. On September 22, 2014, DDH made its final delivery for the project when it delivered the windows for the home. Chandler Homes subsequently purchased additional building supplies for the project on October 12 and 29, 2014.

[64] On July 15, 2014, Mr. Musial sent Nancy Chandler an email in which he clearly confirmed that the declaration signed by Mr. Chandler on July 1, 2014 was indeed to support an application to finance the purchase of a 21-acre property for $500,000.00 with an August 6, 2014 closing. Later, by email sent on July 21, 2014, Mr. Musial further advised Ms. Chandler that the declaration was to support his financing application to buy the property that was to close on August 8, 2014.

[65] On July 17, 2014, DDH asked Chandler Homes to confirm the size of the basement windows as Mr. Musial did not give DDH any window measurements. Although this work fell outside of Chandler Homes’ building contract, Mr. Chandler nevertheless had his foreman provide DDH with this information to advance the project. When Mr. Musial emailed Ted Lillico at DDH on August 22, 2014 to ask when DDH would deliver the windows, Mr. Lillico replied that the delivery would be delayed by about a month as Mr. Musial had modified the sizes of the basement windows from the plans for the log home, and because the company producing the windows had shut down for two (2) weeks due to the summer holiday season. DDH eventually delivered the windows on September 23, 2014.

[66] On July 24, 2014, Malicki & Malicki wrote to Chandler Homes to ostensibly enforce the July 31, 2014 completion date under the declaration as the property appraiser was to photograph the log home on August 1, 2014. However, as Mr. Chandler explained, it was simply impossible for Chandler Homes to complete its framing or closing-in work by July 31, 2014 as many required materials (e.g., to build the deck and porches) had not been delivered, as he advised Mr. Musial. As Mr. Chandler explained, it had been Mr. Musial’s responsibility as the general contractor to arrange for the required materials to be delivered and ready for Chandler Homes to install. From the record, I accept that Mr. Musial had not arranged for these materials to be delivered which left Chandler Homes unable to complete its work by July 31, 2014.

[67] On July 25, 2014, Mr. Musial emailed Ted Lillico at DDH to request a delivery of pressure treated lumber that Chandler Homes needed to build the porch and decks for the log home. By sending this message, I find that Mr. Musial acted to discharge his responsibility as the general contractor for the project by arranging for required building materials to be delivered. Later on, by text message sent on July 28, 2014, Mr. Musial asked Mr. Chandler to have Chandler Homes arrange for a delivery of lumber that was required to build the porch. By making this arrangement, Mr. Musial again acted to fulfill his responsibility as the general contractor to arrange for required materials to be delivered.

[68] On August 5, 2014, Mr. Musial texted Mr. Chandler to advise that an appraisal had been completed on the log home which was valued at $950,000.00 on an “as is” basis. Having received the appraisal, Mr. Musial reassured Mr. Chandler that, “there will be no more conflicts between us [and] no more lawyer letter [sic]. Everything is OK.” From the text, Mr. Chandler understood that Mr. Musial had achieved his goal with the declaration and that the completion issue had been resolved or concluded to his satisfaction. On August 27, 2014, the Ukrainian Credit Union registered a $1 million mortgage charge on Mr. Musial’s property in Caledon.

[69] Unsurprisingly, as Mr. Musial was a novice general contractor with limited knowledge and no experience in building a log home, Mr. Chandler quickly came to realize that Mr. Musial lacked adequate knowledge to properly supervise the construction of his log home. Among other things, Mr. Musial did not understand how to read DDH’s drawings for his log home as he clearly stated in his text to Mr. Chandler on November 20, 2014 (i.e., towards the end of Chandler Homes’ involvement with the project). In addition, Mr. Musial constantly asked Mr. Chandler for advice or help on how to instruct the subtrades, such as the electrical, HVAC, roofing and garage door contractors who were unfamiliar with how to correctly complete their work due to differences between building a log home versus a more conventional home. As Mr. Musial readily admitted, Mr. Chandler generously answered his questions and often explained how the subtrades should correctly perform or finish their work. When Mr. Musial inquired about grade elevation issues for the log home, which Mr. Musial and his brother had been trying to address, Mr. Chandler advised that the grade for the log home should be raised to migrate water away from its structure.

[70] During the course of the project, Mr. Musial complemented Mr. Chandler about the good quality of his construction work on several occasions. As a result of his favourable impression with the quality of Chandler Homes’ work on his log home, Mr. Musial raised a potential business venture with Mr. Chandler. The venture proposal was for Mr. Musial to buy property on which Chandler Homes would construct homes using building materials kits that he would supply. As part of this discussion, Mr. Musial texted Mr. Chandler on September 30, 2014 to propose having Chandler Homes build a home on a property that he was trying to purchase. By then, Chandler Homes had completed a considerable amount of its work under its building contract with him.

[71] By statement dated September 30, 2014, DDH confirmed that Mr. Musial had fully paid all of the $368,230.96 that he had owed under his supply contract with the company. To this end, Mr. Musial made his last $46,028.99 installment payment to DDH on September 25, 2014.

[72] On October 10, 2014, the Town of Caledon issued a building inspection report which confirmed that all of Chandler Homes’ framing work was completed and had passed inspection. Although the report stated that inspectors would re-inspect the framing after HVAC and plumbing work for the home was finished (i.e., by Mr. Musial’s subtrades) to ensure that any cuts into load bearing beams passed muster, Chandler Homes had finished its framing work by this date.

[73] At trial, Mr. Musial claimed that Chandler Homes redirected its workers from his log home construction project to perform work on homes owned by Ray King, DDH’s President, and his brother, Jimmy King. However, Chandler Homes’ work on Jimmy King’s home was done in the Fall of 2013 and clearly pre-dated the work that it performed on Mr. Musial’s log home from January 2014 to November 2014. Furthermore, according to the evidence at trial, the renovation work that Chandler Homes undertook on Ray King’s home involved only a few of its workers in late October 2014 and three weeks in November 2014 by which time Chandler Homes has finished most of its work on Mr. Musial’s project. From the evidence, I accept that Chandler Homes did not work on projects for King family members earlier in 2014. In addition, I accept that Chandler Homes had a sufficient number of workers for it to properly complete its work on Mr. Musial’s project but for his refusal to allow Chandler Homes back onto the job site, as further set out below. In the circumstances, I am not persuaded by Mr. Musial’s vague and uncorroborated assertions that Chandler Homes chose to redirect its workers away from his project to prioritize work that it provided to Jimmy King, Ray King, or anyone else in the King family.

[74] November 28, 2014 was Chandler Homes’ last day of work on Mr. Musial’s log home. Once it completed its work for the day, Chandler Homes paused its work so that Mr. Musial could perform some tasks (i.e., which included cutting an opening in the basement where a custom window was to be installed) before Chandler Homes completing its work on the log home project. Mr. Chandler testified that Chandler Homes’ unfinished work on the log home consisted of installing the basement window, installing the front door knobs and trim, installing door locks, caulking the front door, caulking three or four windows, installing wood plugs over some framing screws, completing some basement framing, and installing some remaining decking and a last deck step with lumber that Mr. Musial was to provide or supply. In total, Mr. Chandler estimated that Chandler Homes’ remaining work on the project would have taken three (3) workers less than two (2) days to complete.

c. Lockout and Litigation

[75] On December 9, 2014, Mr. Chandler texted Mr. Musial to ask if the basement hole was cut so that Chandler Homes could return to install the basement window and finish its remaining work. In response, Mr. Musial texted that Chandler Homes’ unfinished work on the log home had been completed the previous week in its absence. Mr. Musial’s response also advised of his intention not to pay Chandler Homes the remaining balance that he owed under the building contract. Thereafter, Chandler Homes’ counsel made a formal demand for Mr. Musial to pay the remaining balance under the building contract by December 18, 2014. The balance went unpaid.

[76] On December 19, 2014, Chandler Homes registered a claim for lien for the amount of $35,729.63 on title to the lands where the log home was built. The $35,729.63 claim for lien reflected the difference between the $162,404.91 that Chandler Homes invoiced Mr. Musial and the $126,675.28 that he paid towards his obligations for the project. Among other things, the charges on the invoices from Chandler Homes that Mr. Musial paid included various charges for fuel and accommodation costs. In addition, Chandler Homes charged HST on its invoices and did not give Mr. Musial a discount for using cash to pay his account.

[77] By email sent to Chandler Homes’ counsel on December 21, 2014, Mr. Musial confirmed that he had refused to allow Chandler Homes to return to the site after December 9, 2014 which left it unable to complete its remaining work on the project. He also referred to various completion costs that purportedly totalled more than $50,000.00 to finish the log home project. He then asked Chandler Homes’ counsel to resolve the lien, failing which he threatened to sue DDH and Chandler Homes for completion costs. He also alluded to a possible complaint against Chandler Homes’ counsel to the Law Society of Ontario.

[78] On January 13, 2015, Mr. Musial texted Mr. Chandler about having Chandler Homes build a home for him on a cottage lot that he had purchased on Pigeon Lake in Peterborough County.

[79] On January 18, 2015, Mr. Musial emailed Ms. Chandler to ask Chandler Homes to remove its claim for lien on his Caledon property. Subsequently, Chandler Homes had the lien removed after the amount in dispute was paid into court.

[80] On February 6, 2015, Chandler Homes brought an action to recover the $35,729.63 which had formed the basis of its lien.

[81] By email sent on February 15, 2015, Mr. Musial acknowledged Chandler Homes’ action against him and gave notice of a counterclaim that he intended to bring against DDH and Chandler Homes. In addition, he confirmed that DDH and Chandler Homes could not visit the log home to view or resolve any of the alleged deficiencies that he had raised in respect of the building materials supplied or the construction work performed for the project.

[82] On March 5, 2015, Mr. Musial counterclaimed for $124,203.30 against DDH and Chandler Homes, as alleged partners or joint venturers, for breach of contract due to deficiencies, delays, completion costs, and other claimed charges or offsets.

Credibility

[83] A determination of many key facts in this case will hinge on the credibility of the witnesses. In Faryna v. Chorny (1952), 1951 CanLII 252 (BC CA), 2 DLR 354 (BCCA) at para 10, the British Columbia Court of Appeal gave the following guidance for assessing the credibility of interested witnesses by explaining that, “the real test of the truth of the story of a witness in such cases must be its harmony with the preponderance of probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions.” A trier of fact may accept all, some or none of the evidence of a witness which must be assessed according to many factors including: a) whether the evidence makes sense by being internally consistent, logical or plausible; b) whether there are inconsistencies or weaknesses in the evidence of the witness such as internal inconsistencies, prior inconsistent statements, or inconsistencies with the evidence of other witnesses; c) whether there is independent evidence to confirm or contradict the witness’ evidence, or a lack of such evidence; d) the witness’ demeanour, including their sincerity and use of language, although this must be considered with caution; and d) whether the witness, particularly one that is a party in a case, may have a motive to fabricate: Caroti v. Vuletic, 2022 ONSC 4695 at para 434.

[84] The main witness for Chandler Homes was Jeff Chandler, its principal. Mr. Chandler gave clear and straightforward evidence that was largely consistent with contemporaneous documents. Mr. Chandler was thoughtful, took care to not overstate his evidence, and conceded the limits of his memory in describing the events at issue that took place a number of years ago. I found him to be a credible witness.

[85] Nancy Chandler testified about her work in this matter as Chandler Homes’ administrator. Ms. Chandler testified in a clear and forthright manner. She made appropriate concessions and did not overreach in her testimony which was supported by documents in the evidentiary record. I found her evidence to be balanced and credible.

[86] The other witness for Chandler Homes was Ryley Bowry, its foreman. Mr. Bowry gave clear and direct evidence about the project to construct the log home. His testimony reflected his first-hand knowledge that was largely but not fully consistent with the evidence from Mr. Chandler and Ms. Chandler. I found that his evidence was credible.

[87] Ray King testified for DDH. Mr. King gave thoughtful evidence, readily conceded his limited recollection due to the passage of time, and relied on documents to ground his evidence and avoid overstatements. I am satisfied that Mr. King was a credible and reliable witness.

[88] Marcin Musial testified at trial. He was impeached by prior inconsistent statements from his examination for discovery regarding his decision to act as his own general contractor on the building project, and did not persuasively reconcile his prior contradictory statements. When confronted with discrepancies in his evidence, Mr. Musial grew defensive and offered imprecise or vague responses. Much of his evidence was uncorroborated. I have approached Mr. Musial’s evidence with caution.

Central Issue

[89] This case largely turns on whether the building contract was repudiated. Chandler Homes takes the position that Mr. Musial breached and repudiated the building contract by refusing to allow it to return to the worksite to complete its remaining work. Mr. Musial’s position is that DDH and Chandler Homes, by way of a partnership or joint venture, breached and repudiated the building contract due to substantial delays in supplying building materials and constructing the log home, respectively, which constituted a failure to perform the work contracted for and entitles him to damages for deficiencies and completion costs.

Legal Principles

[90] This case is governed the law of construction contracts.

[91] A contract is repudiated by conduct that demonstrates a party’s absolute renunciation of its contractual obligations: Southwest Waterproofing and Coatings Inc. v. 155 Uptown and Van Mar, 2022 ONSC 3497 at para 19.

[92] Where an owner without justification ceases to make required payments under a building contract or through some act without cause makes it impossible for the contractor to complete its work, then the owner has breached the contract and the contractor may abandon the work and enforce its claim for lien and be awarded damages for breach of contract: D&M Steel Ltd. v. 51 Construction Ltd., 2018 ONSC 2171 at para 49.

[93] Mere bad or defective work or insignificant non-completion will not, in general, entitle an owner to terminate a contract, but the owner will have an obligation to pay for the work and make a claim for damages for the defective work. An owner will not be able to terminate the contract because of some minor or inconsequential failure to complete, but may have a claim against the contractor for non-completion or defective workmanship damages: D & M Steel Ltd at para 51.

[94] If a contractor abandons the contract, repudiates the contract, fundamentally breaches the contract, or performs the contract in a way that it is so defective as to amount, in substance, to a failure or refusal to carry out the contract work, the owner is entitled to terminate the contract, to claim damages for breach of contract, and to be discharged from its obligations: D & M Steel Ltd at para 53.

[95] Fundamental breach is an extraordinary doctrine that is applied sparingly given the exceptional remedy to which it gives rise as a fundamental breach may relieve the non-breaching party from future executory obligations under the contract. In determining whether there has been a fundamental breach, the court considers: a) the ratio of the parties obligations not performed to the parties obligations as a whole; b) the seriousness of the breach to the innocent party; c) the likelihood of repetition of the breach; d) the seriousness of the consequences of the breach; and e) the relationship of the part of the obligation not performed to the whole obligation: Southwest Waterproofing at para 26; RPM Investment Corp. v. Lange, 2017 ABQB 305 at paras 49-50.

[96] Repudiation occurs by words or conduct showing an intention not to be bound by the contract. A party’s words, actions or refusal to perform may amount to a repudiation even if that party mistakenly believes its words or conduct are within its contractual rights. In determining whether a contract has been repudiated, the conduct and circumstances of the parties must be considered as a whole to assess whether the defaulting party’s actions reasonably establish that it no longer intends to be bound by the provisions of the contract. In the event of a repudiation, the non-repudiating party may chose to either accept the repudiation, which terminates any prospective obligations under the contract, or decline the repudiation which leaves contractual obligations in place: Southwest Waterproofing at paras 27-31; RPM Investment, at paras 52-55.

[97] A contractor who fundamentally breaches a contract is entitled to no damages: Southwest Waterproofing at para 33.

Analysis

The Claim by Chandler Homes

[98] I am satisfied that Chandler Homes has established its claim for unpaid work under its building contract with Mr. Musial.

[99] From the evidence, I find that Mr. Musial wrongfully repudiated the building contract. By refusing to allow Chandler Homes access to the job site after December 9, 2014 to complete its remaining work, I am satisfied that Mr. Musial made it impossible for Chandler Homes to complete its work and fundamentally breached the contract: D&M Steel at para 49. Rafael Pereira v. Il Dreams Homes Ltd., 2022 ONSC 441 at para 70. In addition, by refusing to pay Chandler Homes as required by the contract, Mr. Musial further engaged in a fundamental breach of the contract: Ibid. From the evidence, I am satisfied that Chandler Homes accepted Mr. Musial’s repudiation after December 9, 2014 and treated its building contract with him as having concluded.

[100] I am satisfied that Chandler Homes did not abandon, repudiate or fundamentally breach its building contract with Mr. Musial, or perform the contract in a way that was so defective as to amount, in substance, to a failure or refusal to carry out its obligations under the contract: D&M Steel at paras 53-55. Chandler Homes had completed its framing work to close in the log home, which passed building inspection, and sought to arrange to complete its remaining and limited unfinished work. Given the terms of its building contract and the work that Chandler Homes had performed and still had to complete as of December 9, 2014, as set out earlier, and having regard to the accounting that Chandler Homes provided to show what Mr. Musial was invoiced and what he has paid on his account, I am satisfied that Chandler Homes is entitled to enforce its claim for $35,729.63 under the building contract.

[101] I am not persuaded that Chandler Homes was responsible for any real construction delays under the building contract, let alone delay that amounts to a fundamental breach or repudiation of the contract. Having carefully considered the entire evidentiary record, and aside from a fairly isolated and relatively minor instance in March 2014 (i.e., when Chandler Homes was occupied with another project) that carries no practical significance as set out earlier, I am satisfied that any delays related to Chandler Homes’ work on the project are fairly and appropriately attributed to Mr. Musial’s conduct, largely in relation to arranging the delivery of required building materials. Despite acting as his own general contractor, Mr. Musial did not consistently make reasonable or adequate arrangements to have building components and supplies delivered and ready for Chandler Homes to install when it came to perform its work. In my view, several factors contributed to this.

[102] Along with his brother, Mr. Musial ran a successful and busy concrete chipping business that required him to work fairly long and gruelling hours while performing difficult tasks. In addition, Mr. Musial was busy viewing and purchasing new properties while the log home project was underway. Due to his other activities, Mr. Musial was frequently away from the job site. As a result, I am satisfied that Mr. Musial, even at the best of times, had only limited availability to supervise the building project despite ostensibly acting as his own general contractor in an effort to cut costs for the project.

[103] Given Mr. Musial’s inexperience with building a home, let alone a log home (i.e., which has its own unique challenges), and the complexity surrounding a project of this magnitude, I am satisfied that Mr. Musial struggled to understand and manage the many aspects of his role as the general contractor charged with the responsibility of overseeing the building project. Having only limited construction knowledge or experience, and unable to read or meaningfully understand the building plans that DDH prepared for his log home, I find without hesitation that Mr. Musial was clearly uninformed or underinformed about many of what he should have known to properly act as the general contractor. By his own admission, Mr. Musial was essentially unable to instruct or direct the various contractors or tradespersons on various aspects of their work on the project which forced him to rely heavily on others, such as Mr. Chandler, to guide him as he tried to navigate the various issues that arose while the project unfolded.

[104] Given Mr. Musial’s limited availability and lack of construction knowledge or experience, it is unsurprising that he encountered difficulties. The evidence is clear that he struggled to manage the project as its general contractor without fully understanding what he was supposed to be doing.

[105] Among other things, Mr. Musial did not adequately coordinate the delivery of required materials and components to the job site, including the materials that DDH supplied, to have them ready for Chandler Homes to install. In my view, much of this was due to his lack of knowledge or experience with the pace of building a log home that hindered his ability to optimally coordinate the delivery of building materials with the work that contractors or tradespersons were performing. In addition, I accept that the scheduling difficulties were compounded by the fact that he was also running a busy full-time concrete chipping business and buying other properties that left him with only limited if not inadequate time to devote to the building project.

[106] From the record, I accept that DDH and Chandler Homes were quite prepared to discuss the building project with Mr. Musial, answer his questions, and address or otherwise work through issues that arose during the course of the project. Had Mr. Musial invested more time to educate himself about the role of a general contractor and made further efforts to discuss the project with DDH and Chandler Homes, particularly to coordinate the delivery of materials, it is possible that Mr. Musial may have better fulfilled his responsibilities as the general contractor.

[107] I do not find that DDH and Chandler Homes agreed to coordinate the delivery of building materials with construction activities on the project. Neither agreed to perform this work, which falls squarely within the responsibility of the general contractor for a construction project. Although Chandler Homes gave an earlier estimate dated November 16, 2012 to fully construct the entire log home, which included a $61,247.00 fee for general contractor services, it later gave a revised quote in December 2013 without the general contractor fee after Mr. Musial asked for a less expensive quote (i.e., to have Chandler Homes only frame or close in the home) and chose to act as his own general contractor. Having regard to Mr. Musial’s discovery evidence, I am satisfied that he chose to be the general contractor knowing that he was responsible for scheduling the delivery of building materials and coordinating the activities of the contractors and trades. As set out earlier, I recognize that Mr. Hunter and Ms. Chandler make some scheduling inquiries about the delivery of subfloor components to the job site at the outset of the building project to confirm when Chandler Homes could start work on the project. Nevertheless, I do not accept that DDH and Chandler Homes agreed to continue scheduling deliveries or other building activities for the duration of the project, as Mr. Musial otherwise has suggested. Not only is that suggestion inconsistent with the efforts that Mr. Musial personally made during the project to schedule deliveries and construction activities, but it is entirely inconsistent with his role as the general contactor to make these arrangements which he chose to do in order to save costs on the project. Moreover, as Mr. Ryley explained, Mr. Musial kept tight control over supply procurement matters in order to control costs.

[108] With hindsight, Mr. Musial likely would have benefitted by retaining Chandler Homes, or another experienced contractor, to serve as the general contractor for the building project which likely would have improved the delivery of building materials. But from the outset, Mr. Musial chose to pursue the log home project on a tight budget due to his financial constraints and his ambitious plans to buy and develop several investment leisure properties. To cut costs, he chose to act as his own general contractor for the building project which led to some issues that were not entirely unforeseeable. In addition, Mr. Musial made other decisions during the project that also contributed to construction delay.

[109] Despite Mr. Chandler’s advice in February 2014 to heat the basement to mitigate frost-damage to the newly-installed subfloor, Mr. Musial felt that his advice would be too costly which led him to decide not to heat the basement. In turn, the subfloor sustained frost-damage that forced Chandler Homes to repair and level the subfloor before laying and install the logs for the home. Based on this, I am satisfied that responsibility for the delay between February 7, 2014 (i.e., when the subfloor was first installed) and late May 2014 (i.e., when the subfloor was repaired and Chandler Homes could resume construction by installing the logs) is attributed to Mr. Musial’s decision to not heat the basement. Had he followed Mr. Chandler’s advice to heat the basement in February 2014 to avoid frost-damage to the subfloor after it was installed, or in March 2014 to remove the ice build up, I accept that Chandler Homes could have installed the logs more quickly after they were delivered on March 7, 2014. As set out earlier, I accept that Chandler Homes delayed its return to the site from March 17, 2014 to March 31, 2014 to work on other projects. However, Mr. Musial would not heat the basement and chose to wait for the ice build-up on the subfloor to naturally melt as the weather warmed. It follows that Chandler Homes could not have installed the logs in March or April 2014 as it had to wait until the ice had melted in the Spring before repairing the subfloor and proceeding to install the logs, as it did starting on May 19, 2014.

[110] As mentioned earlier, there were other factors that delayed Chandler Homes’ construction work on the project including issues related to concrete foundation pockets, piers and excavation activities, the (re)location of building materials which congested the job site, grades that fell below plan specifications, and scheduling contractors or subtrades at intervals to avoid having them disrupt other crews on the project, among others. In my view, these delays are properly attributed to Mr. Musial who was responsible as general contractor for ensuring that work on the project was correctly performed and appropriately coordinated. Given their nature, I find that these issues resulted from Mr. Musial’s failure to adequately manage the project as general contractor.

[111] During construction, Mr. Musial decided to change the design of his log home to make a new basement entrance. This change required Chandler Homes to purchase additional building materials and perform additional work which delayed construction of the home.

[112] Given the circumstances by which Mr. Chandler signed the July 1, 2014 declaration, I am not persuaded that Chandler Homes should be held responsible for not completing its construction work on the project by July 31, 2014, particularly as Mr. Musial represented that he would only use the declaration to support a financing application and not act on the July 31, 2014 completion date against Chandler Homes. To this end, Mr. Musial wrote to Mr. Chandler on August 5, 2014 to advise that the matter of the declaration and the conclusion date had been concluded as he had obtained a satisfactory valuation for his financing application. In any event, as discussed earlier, the July 31, 2014 completion date would have been impossible to achieve as various building materials had not yet been delivered. Among other things, the windows for the log home were not delivered until September 22, 2014 as Mr. Musial delayed placing his window order even after DDH cautioned him to place the order to ensure that it could be processed in a timely manner to keep pace with the construction of his log home.

[113] I do not find that Chandler Homes redirected workers away from Mr. Musial’s log home project to perform work on homes owned by the King family, as he has suggested. As mentioned earlier, the work that Chandler Homes performed on Jimmy King’s home was performed in 2013 and clearly pre-dated Mr. Musial’s project. In addition, Chandler Homes’ work on Ray King’s home was performed in late October 2014 and over three weeks in November 2014 when Chandler Homes had largely completed its work on Mr. Musial’s project, with the limited remaining work consisting of modest finishing tasks. Accordingly, I do not accept that Chandler Homes should be responsible for any delays related to the construction of Mr. Musial’s log home on this basis.

[114] I do not accept that Mr. Musial was entitled to terminate the building contract due to defective work performed by Chandler Homes. The building inspection report issued by the Town of Caledon on October 10, 2014 confirmed that all of Chandler Homes’ framing work under the building contract had been completed and passed inspection. For his part, Mr. Musial was very satisfied with the quality of the work that Chandler Homes has performed over the course of the building project and repeatedly complemented Mr. Chandler on the quality of his work on several occasions. Given his high level of satisfaction, Mr. Musial went so far as to propose a venture to have Chandler Homes build homes on lands that he would purchase. Even after Chandler Homes registered its construction lien, Mr. Musial contacted Mr. Chandler about having a home built for him on a cottage property that he had purchased. Taking this all into account, I am not persuaded that Mr. Musial is entitled to terminate his January 9, 2014 building contract with Chandler Homes due to alleged defective work or deficiencies.

The Counterclaim by Mr. Musial

[115] For the reasons that follow, I find that the counterclaim should be dismissed.

[116] I am not persuaded by Mr. Musial’s claim that a partnership or joint venture existed between DDH and Chandler Homes.

[117] The definition of “partnership” under s. 2 of the Partnerships Act, RSO c P5 comprises three (3) elements, namely a) a business, that is b) carried on in common, c) with a view to profit: Mahendran v. Singh, 2022 ONSC 3908 (Div Ct) at paras 22-24. An agreement that creates a partnership is a contract which need not be made in writing. Whether or not a partnership exists depends on the substance of the relationship and not on its form or how the parties chose to characterize it: Clarksburg Contractors Limited v. Saks, 2012 ONSC 4903 (Div Ct) at para 27.

[118] By applying the foregoing principles, I am satisfied that DDH and Chandler Homes were not in a partnership. Although DDH and Chandler Homes operated as for-profit companies, each clearly ran a distinct and separate business from the other. At all material times, DDH carried on business by designing log and timber frame homes and supplying materials kits to build them. For its part, Chandler Homes separately carried on business as a building contractor. Over the years, DDH mentioned Chandler Homes to a number of its clients, including Mr. Musial, as a reputable and experienced contractor that could build homes with materials kits that DDH would supply. That said, the evidence is clear that Mr. Musial entered into two (2) separate contracts with DDH and Chandler Homes, respectively, in respect of their distinct businesses. First, Mr. Musial entered into a contract with DDH to buy the plans and a materials package for building his log home. He later entered into a second contract to have Chandler Homes frame or close in the home by using the building materials package. There is no evidence to suggest that DDH and Chandler Homes entered into an agreement, written or verbal, to establish a partnership or a common business enterprise of any sort. Moreover, DDH referred Mr. Musial to Chandler Homes and to several other contractors with experience building log homes so that he could pick one to build his log home. In addition, as Mr. King testified, DDH saw no financial benefit by Mr. Musial retaining a contractor that it had referred to him. DDH did not receive any referral fees or other financial incentives by providing Mr. Musial with information about Chandler Homes. Taking this all into account, I am not persuaded that Mr. Musial has satisfied the criteria to establish that DDH and Chandler Homes were in a partnership under s. 2 of the Partnerships Act: Mahendran at para 23.

[119] A second path to establishing a partnership may arise under ss. 15(1) of the Partnerships Act which provides:

Every person, who by words spoken or written or by conduct represents himself or herself or who knowingly suffers himself or herself to be represented as a partner in a particular firm, is liable as a partner to any person who has on the faith of any such representation given credit to the firm, whether the representation has or has not been made or communicated to the persons so giving credit by or with the knowledge of the apparent partner making the representation or suffering it to be made.

[120] To establish a partnership between DDH and Chandler Homes under ss. 15(1) of the Partnerships Act, Mr. Musial first bears the onus to show that DDH and Chandler Homes held themselves out to the public as being in partnership by the manner in which they conducted business: 1062484 Ontario Inc. v. McEnery, 2021 ONCA 129 at para 30; Dawson v. Halpenny Insurance Brokers Ltd., 2017 ONSC 4487 at para 62. Should this be established, the onus then shifts to DDH and Chandler Homes to show that they clearly conveyed to the public that they were not partners: McEnery at para 30; Dawson at para 63. Even if both steps favour Mr. Musial, he must still show that he “gave credit” to DDH and Chandler Homes based on his subjective belief of the partnership which they held out in public and the extent, if any, to which he relied on this belief in dealing with them: McEnery at para 30; Dawson at para 64.

[121] There is no evidence to suggest that DDH and Chandler Homes publicly held themselves out as being in partnership. Although DDH through Ben Hunter referred Mr. Musial to Chandler Homes, and to other building contractors, to help him choose a contractor to build his log home, there is simply no evidence that DDH or Chandler Homes ever publicly held themselves out as being partners or that they ever carried on business in partnership. In fact, the evidence clearly supports the opposite conclusion by showing that DDH and Chandler Homes operated as separate and independent businesses. All of the records clearly show that DDH and Chandler Homes were separate corporate entities with distinct business activities, and that each entity independently contracted with Mr. Musial on discrete aspects of the log home project at different times. Despite Mr. Musial’s purported suspicion that DDH and Mr. Chandler came to somehow work together and against him over the course of the building project, there is no credible evidence to ground a finding that DDH and Chandler Homes were partners as Mr. Musial has alleged. Moreover, there is no credible evidence that Mr. Musial gave credit on account of his belief that DDH and Chandler Homes were in partnership.

[122] For similar reasons, I am not persuaded that Mr. Musial has established that DDH and Chandler Homes were in a joint venture.

[123] There is no precise legal definition for a joint venture. Various meanings have been attributed to the term, including a) a partnership, b) an association of two or more persons for a limited purpose without the participants becoming partners; or c) any combination of resources by two or more persons in order to conduct a commercial venture jointly under agreed-upon rules. The test for a partnership and a joint venture is the same, although a joint venture may but does not have to be limited to a single undertaking or ad hoc enterprise: Clarksburg Contractors at paras 28-29; Continental Bank Leasing Corp. v. Canada, 1998 CanLII 794 (SCC), [1998] 2 SCR 298 at para 24. Besides the requirement that a joint venture must have a contractual basis, the following additional factors have been judicially applied in deciding whether a joint venture exists: a) a contribution by the parties of money, property, effort, knowledge, skill or other asset to a common undertaking; b) a joint property interest in the subject matter of the venture; c) a right of mutual control or management of the enterprise; d) expectation of profit; e) a right to participate in the profits; and f) most usually, limitation of the objective to a single undertaking or ad hoc enterprise: Canlan Investment Corp. v. Gettling, 1997 CanLII 4126 (BCCA) at para 31.

[124] There is no evidence that DDH and Chandler Homes entered into a contract to form any kind of partnership, association, or combination of resources for a joint commercial venture with any agreed-upon rules. Moreover, there is no evidence that either company gave funds, property or other contributions to any common undertaking or enterprise, ad hoc or otherwise, with any mutual control, management or right to profits. Although DDH agreed to defray half the cost for Chandler Homes to repair the subfloor to Mr. Musial’s log home after it was damaged by frost, I am not satisfied that this is the kind of contribution that should support a finding of a joint venture as the evidence clearly shows that DDH simply offered to pay this amount as a goodwill gesture to maintain or restore its business relationship with Mr. Musial without DDH (or Chandler Homes for that matter) taking any responsibility for the frost damage that occurred after Mr. Musial chose to not heat the basement to save money. Moreover, there is simply no evidence to support or satisfy any of the other Gettling factors. From the evidence, I am satisfied that DDH and Chandler Homes independently carried on business as separate entities.

[125] I am satisfied that the evidence does not support Mr. Musial’s counterclaim based on his allegations of delay.

[126] DDH’s supply contract with Mr. Musial did not have a schedule for the production and delivery of building materials. The supply contract expressly provided that DDH could require the full contract price to be paid prior to the delivery of material. By signing the contract, Mr. Musial was bound by its terms that were clear and unambiguous: Fraser Jewellers (1982) Ltd. v. Dominion Electric Protection Co. (1997), 1997 CanLII 4452 (ON CA), 34 OR (3d) 1 (CA) at paras 30 and 31.

[127] On November 12, 2013, Mr. Musial asked DDH to deliver the building materials kit in the first week of January 2014 without having paid the balance owed under his supply contract with DDH and without having signed the amended supply contract for him to pay for the building materials by instalments before each tranche of materials was delivered. In addition, Mr. Musial had not arranged for Chandler Homes to build his log home. On November 29, 2013, Shawn Hunter advised him that DDH could not put the subfloor components into production or deliver any components of the materials package until he signed the amended supply contract with the instalment plan terms. Mr. Musial then signed DDH’s amended supply contract on December 18, 2013 and later agreed on terms with Chandler Homes for a building contract on January 9, 2014 but without actually signing a building contract after choosing to negotiate better terms with the contractor over the next several weeks. Eventually, DDH delivered the subfloor materials on or about January 23, 2014 which Chandler Homes promptly installed. In light of all of this, I am satisfied that there was no delay with the delivery or installation of the subfloor.

[128] On January 16, 2014, Mr. Musial agreed to take delivery of the logs on February 24, 2014 although DDH actually made the delivery on March 7, 2014. However, as discussed earlier, a construction delay arose due to ice build-up that damaged the subfloor after Mr. Musial chose to not follow Mr. Chandler’s advice to heat the basement to prevent such damage. As Mr. Musial further decided to wait for the ice to naturally melt rather than remove the ice by heating the home, construction was further delayed until May 2014 when the weather sufficiently warmed to melt the ice which allowed construction to resume.

[129] As explained earlier, the log home project experienced further construction delays due to the lack of appropriate planning or coordination by Mr. Musial who acted as his own general contractor for the project. Among other things, Mr. Musial did not promptly order windows for the project, even after DDH asked him to do so to avoid delays, which delayed the delivery of the windows until late September 2014. In addition, Mr. Musial made changes to the design of the home which further delayed construction. Having regard to all of the evidence, I am quite satisfied that neither DDH nor Chandler Homes were responsible for these construction delays.

[130] Mr. Musial testified that he felt that Chandler Homes took too long to build his log home. However, as set out earlier, Mr. Musial was a novice home builder with only limited knowledge of construction matters and no prior experience building a home. In light of this, I prefer the evidence of Mr. Chandler, an experienced contractor, who testified that the work on Mr. Musial’s log home was fairly substantial and complicated given the size and configuration of the home that required several months of work to properly complete. Having regard to Mr. Chandler’s evidence and the chronology for the project, I am satisfied that Chandler Homes completed its construction work without undue delay.

[131] As discussed above, I am not persuaded that Chandler Homes should be bound by the so-called “completion date” of July 31, 2014 as set out in the declaration that Mr. Chandler signed on July 1, 2014 at Mr. Musial’s insistence to facilitate an appraisal for a financing application. In view of Mr. Musial’s text on August 5, 2014 in which he reassured Mr. Chandler that the matter of the declaration had been satisfactorily concluded with “no more conflict between us [and] no more lawyer letter [sic],” I am satisfied that Mr. Musial confirmed that he had achieved his intended goal with the declaration and would not be requiring Chandler Homes to complete its work on the log home by July 31, 2014.

[132] As explained earlier, the Town of Caledon issued a building inspection report on October 10, 2014 to confirm that Chandler Homes’ framing work on the log home had passed inspection. In addition, Mr. Musial repeatedly complemented Mr. Chandler on the quality of Chandler Homes’ work on the construction project and clearly proposed to have Chandler Homes work on additional home building projects with him. In the circumstances, I am not persuaded that the work that Chandler Homes performed on the log home was deficient to justify the damages that Mr. Musial has sought in the counterclaim.

[133] As of December 9, 2014, Mr. Musial did not allow Chandler Homes to return to the job site to complete its finishing work. He also refused to pay the remaining balance that was due to Chandler Homes under the terms of the building contract. In my view, Mr. Musial acted without cause to make it impossible for Chandler Homes to finish its work and chose without justification to not pay what he owed to Chandler Homes under the contract. As a result, I find that Mr. Musial should have no claim for completion costs: D&M Steel at paras 49-50.

[134] In his evidence, Mr. Musial complained of various gaps that had formed between the logs that Chandler Homes had installed. But as Mr. Chandler testified, gaps and cracks in a log home naturally occur as the logs settle and shrink after they are installed. To manage this, Mr. Chandler explained that “thru bolts” (i.e., fasteners that Chandler Homes installed in the log walls) had been tightened during construction and had to be further tightened every three (3) months within the first two (2) years after construction as part of a standard home maintenance routine to control the gaps by keeping the logs as straight and flush as possible. Tightening the thru bolts will pull the logs together to keep them in their tongue and groove system and, in turn, close the gaps in any cracks to the logs. In addition, Mr. Chandler explained that log homes require post-construction maintenance by repositioning doors and windows and related trim pieces (i.e., by reinstalling these components with fresh silicone) to adjust for the shifting of logs as they shrink which may place pressure on doors and windows to not operate correctly. As Mr. Chandler stated after examining photos of the various gaps and misaligned trim pieces in the log home that Mr. Musial produced, it is apparent that standard post-construction maintenance for the home (i.e., by tightening its thru bolts and adjusting its doors and windows) had not been performed. Mr. Chandler’s evidence is supported by the Town of Caledon’s building inspection report dated December 2, 2016 which confirmed the need to tighten the thru bolts to address the gaps in the logs. Having regard to all of this, I am satisfied that none of these issues support Mr. Musial’s counterclaim for deficiencies.

[135] There is no evidence to support Mr. Musial’s claim that any building materials or supplies delivered by DDH in the building materials kit were deficient or inadequate. Although DDH agreed to supply Mr. Musial with a gate at cost, as mentioned earlier, there is no evidence that he ever followed up with DDH to request a design change, to provide DDH with any measurements to produce or manufacture the gate, or that he otherwise sought to include the gate in the building materials kit that DDH prepared for his home. In addition, I am not persuaded by Mr. Musial’s uncorroborated assertion that DDH’s materials package lacked a sufficient amount of stain. In the circumstances, I find that Mr. Musial has not established this part of his counterclaim.

[136] I would add that Mr. Musial refused to allow DDH or Chandler Homes to attend his Caledon property to view the home and resolve any of the alleged deficiencies with the building materials or the construction work which they had provided or performed, respectively.

[137] In any event, I find that Mr. Musial has not established loss-related damages to support his counterclaim. The only evidence that he adduced with respect to his damages were Quickbook printouts for his concrete chipping company, Drum Chipping Services Inc., which is not a party to this action. Regardless, these records do not establish any losses but merely show his company’s declining sales from 2013 to 2014 without any meaningful evidence to explain its actual business activities over this period or how its activities may have changed. More significantly, Mr. Musial’s personal income tax records clearly show that he earned nil income (i.e., $0.00) in 2013 before he earned $95,000.00 of income in 2014. Taking this all into account, I am satisfied that the evidence does not show a reduction or loss of his income or other losses to support the counterclaim.

Outcome

[138] Based on the foregoing, I find that Chandler Homes is entitled to damages from Mr. Musial for the outstanding amount of $35,729.63 which he owed for its contracted work. In addition, I find that Mr. Musial is entitled to no damages.

[139] Accordingly, judgment is granted as follows:

a. Mr. Musial shall pay damages to Chandler Homes in the amount of $35,729.63 plus prejudgment interest pursuant to the Courts of Justice Act;

b. The foregoing may be paid from the funds that Mr .Musial paid into court to vacate Chandler Homes’ lien; and

c. The counterclaim is dismissed.

[140] If the parties are unable resolve the issue of costs, Chandler Homes and DDH may deliver written costs submissions of up to 5 pages (excluding any costs outline or offer to settle) within 20 days, Mr. Musial may deliver responding submissions on the same terms within a further 20 days, and Chandler Homes and DDH may deliver any reply submissions within a further 20 days.

Doi J.

Date: September 16, 2022

COURT FILE NO.: CV-15-620-00

DATE: 2022 09 16

SUPERIOR COURT OF JUSTICE - ONTARIO

BETWEEN: 1088558 Ontario Inc., Plaintiff

AND:

Marcin Musial, Defendant

AND BETWEEN:

Marcin Musial, Plaintiff by Counterclaim

AND:

1088558 Ontario Inc. and Discovery Dream Homes Ltd., Defendants to Counterclaim

BEFORE: Doi J.

COUNSEL: John M. Gray, for 1088558 Ontario Inc., Plaintiff and Defendant to Counterclaim

Marek Z. Tufman, for Marcin Musial, Defendant and Plaintiff by Counterclaim

Catherine A. Bruder, for Discovery Dream Homes Ltd., Defendant to Counterclaim

ENDORSEMENT

Doi J.

DATE: September 16, 2022